Despite more competition, single-bid contracts stay steady

The Obama administration’s chief procurement policy official agreed with the Government Accountability Office’s recommendations to boost the role of the competition advocate and have agencies review why they often receive only one bid on a contract, according to a new report.

In reviewing competition in federal contracting, GAO found agencies’ use of noncompetitive contracts declined from 36 percent of contracts in fiscal 2005 to 31 percent in fiscal 2009. However, contracts that received only one bid remained steady at 13 percent of the total each year.

Daniel Gordon, administrator of the Office of Federal Procurement Policy, told GAO that its recommendations are consistent with President Barack Obama’s procurement reforms. Obama has directed agencies to be more fiscally responsible and reduce how often they use high-risk types of contracts, such as sole-source awards or cost-reimbursement contracts, according to the report.

OMB says agencies must boost competition in contracting

Gordon also told GAO the administration has a lot of work ahead to change agencies’ approaches to acquisition. However, Gordon and other OFPP officials will meet periodically with agency leaders to review their progress on reducing risks in procurement.

Defense Department officials also agreed with GAO’s recommendations, according to the report.

In GAO's review of 107 contracts, auditors found agencies had a variety of reasons for not opening their contracts and task orders to full competition. The two most common reasons were that there was only one responsible source capable of doing the work and that sole-source awards are allowed under the Small Business Administration’s 8(a) business development program.

For work that supports DOD’s weapons programs, competition was limited or even ruled out because officials lacked access to proprietary technical data and for decades had relied on a specific contractor for expertise, the report states.

Even a program office can stop competition, GAO found. Managers can press contracting officers to award contracts with no competition largely due to their relationship with a company and because the company understands the program’s requirements, the report states.

At the same time, strong incumbent contractors and overly restrictive program requirements can prevent competition. In addition, vendors sometimes form large teams to submit one offer for broader government requirements, which results in a contract receiving just one bid, the report states. On the other hand, ambiguous justifications for noncompetitive contracts and limited documentation for why a contractor’s price is reasonable also held competitions down to one bid.

To boost competition, GAO recommended that agencies’ competition advocates get actively involved with program offices to highlight opportunities for more competition.

DOD officials told GAO that their competition advocates will be directed to measure and report on ineffective competitions, or solicitations that receive only one bid. In addition, contracting officers must analyze costs in all situations with ineffective competition. DOD also intends to form a contracting integrity panel to study creating more opportunities for good competition, the report states.